Applied Research, Real Options In Mergers And Acquisitions

Under the background of economic globalization, the competition among the domestic enterprises is getting more and more drastic with the rapid development of China's market economy and capital market. The enterprise begin to pay much attention on the issue of capital management rather than material products, and M&A becomes the most effective way for corporations'growth. In order to carry out M&A successfully, the prerequisite is to fully understand and accurately evaluate a corporation's value, and it's also the core issues of investment in real and financial assets.It is well known that M&A is the investment activity with high risks and many uncertainties. Because of the existing limitations, the traditional evaluation methods can not exactly evaluate the value of managerial flexibility and strategy that is brought by uncertainties in M&A. However, the real option method which raised in 1970's not only overcomes the weakness of the traditional evaluation method but also applies the basic principle and model of the financial option into the investment decision and assessment of the enterprises, giving the investors a series of option of making the arrangement in the future according to the circumstance and information.By systematic elaborations on traditional evaluation methods and real options theories, the thesis wants to point out the disadvantages of the traditional evaluation methods in M&A and at the same time amply explain the fact that the real options is much more suitable in the volatile circumstances of corporations'value evaluation while taking the special characters of M&A into account. Moreover, the thesis deeply introduces the process of applying real options theory and model into the evaluation of enterprises'M&A by the analysis of the real domestic M&A cases.